There’s no doubt that loyalty programs are popular among consumers. But what about businesses? Are there benefits to implementing a loyalty program for companies in the residential rental industry?
The answer is a resounding “yes!” Loyalty programs can help businesses maximize their rental revenue and improve customer retention. Here are some of the ways they can do both.
The more loyal customers are to your business, the more likely they are to continue renting from you. This reduces your customer acquisition costs and ensures that you’re only spending money on acquiring new leads who will be likely to pay their rent on time. Research shows that increased loyalty leads to increased life-time value (LTV) for renters who tend to be more profitable than transient renters. A 2015 study by Nucleus Research found that LTVs are seven times higher after three years of continuous customer retention.
The same study revealed something even more promising: LTVs for loyal customers were projected to grow faster than those without loyalty programs in place. For example, 10 percent annual growth for loyal customers versus 5 percent for those without loyalty. This translates into real dollars and cents - businesses with loyalty programs can expect to see a 20 to 30 percent increase in revenue over time.
Revenue isn’t the only benefit of having a loyalty program in place. It can also help improve collections and reduce bad debt. In fact, according to a study by Bond Brand Loyalty, 78 percent of customers who don’t pay their rent, do so because they feel they are no longer valued by the business. A loyalty program signals to customers that you value them and want to keep them as long-term tenants. When you show customers that you care about them, they more likely to take pride in their rental and are less likely to fall behind on payments.
In addition to boosting revenue and improving collections, loyalty programs can also help reduce costs. This is especially true for property managers who use a third-party collection agency. When you have a loyalty program in place, the third-party collector can use it to target those customers who are more likely to fall behind on rent payments. This cuts down on the amount of time spent trying to collect rent from delinquent tenants, saving you both time and money.
There’s no question that loyalty programs offer big benefits for businesses in the residential rental industry. If you’re not currently using one, now is the time to start! Not only will it help you boost revenue and improve collections, but it will also help reduce costs, making your business more profitable in the long run.
- Kelvin Cook, Founder & CEO